Credit cardholder pay annual fees and now debit cardholders will be paying monthly fees. Last month, the big bank heads, Wells Fargo & Co. and J.P. Morgan & Chase, announced that they will be piloting $3 debit fees on a monthly basis.
Soon after, Bank of America Corp., Regions Financial Corp., and SunTrust are planning to do the same thing. Come November, debit users of these five banks across the nation will be subject to monthly debit fees ranging from $3 to $5.
SunTrust and Bank or America will release a $5 fee and Regions will roll out a $4 fee.
The charges are not maintenance fees, and will come every month even if you don’t have a balance. Banks have begun rolling out these fees in order to make up from the lost revenue generated by the Dodd-Frank amendment which goes into effect Oct. 1.
The amendment is responsible for 6.6 billion annual losses for the banks. By charging the consumer monthly or maintenance fees, they can recollect more revenue.
Consumers are not too happy about the charge, and many have begun shopping around for new debit accounts that remain free.
Blythe Jones, 47, of Savannah, Georgia, a Wells Fargo debit card customer in one of the fee pilot areas, is upset about the monthly charge.
“Three dollars a month wouldn’t have been that much back in 2005, but now in 2011, with skyrocketing unemployment and rising food costs, I’m in penny-pincher mode, and I want to keep that money for myself and for my family,” she said.
Analysts warn consumers that they should get used to the new debit fees as they are here to stay. Approximately 500 million uses debit cards, if each of these cards is subject to a monthly fee, banks could see their profits increase at a substantial rate. Banks could see profits in the trillions.
Adding monthly debit fees isn’t all that the banks have done as of late. They have also axed the majority of their debit rewards programs, and some banks like Regional Bank First Tennessee are planning to set up per-transaction fees.
Per-transaction fees take a small portion of your money and pay it back to the banks after each swipe you make. Regional First Tennessee plans to cap the fee at $3 monthly, which would amount the same as the monthly debit fees that major banks are implementing.
While it may be the same price, consumers have some reserves about being charged for every purchase. “I don’t like the idea of being constantly reminded that the bank owns a piece of my money. I would rather just pay the money up from and forget about it,” Lisa Monroe, 63, a Regional Bank First Tennessee customer, said.